In case you missed it, Charleston School of Law is the rectum of its existence, well-poised to be law school number two to be flushed into oblivion as the law school bubble collapses (unless, I guess, Indiana Tech beats it?) barring a salvation thrust by InfiLaw or some other angel investor.
What follows is a proposed timeline of what went wrong followed by some straightforward analysis.
For those of who take a tl;dr approach to this blog, I'll provide the bullet point up front: this school is the most blatant public example of a reverse Robin Hood generational wealth transfer seen in recent times.
May 12, 2003: CSOL is founded.
- Problem 1: Despite the warm words of pseudo-elites who should know better, South Carolina did not need a second law school. Really, this should be problems 1-10 by itself.
- Problem 2: The school is founded as a for-profit institution. Not that non-profit law schools behave substantially better, but there are special pitfalls with for-profit institutions, one of which bites them in the ass about a decade later. And this wasn't some honest mistake by business people who didn't think through the LLC vs. 501(c)(3) debate, or a cold profit calculation by a nasty corporation. The school was founded by three judges and two prominent lawyers.
- Problem 3: The five founders of the school should have easily anticipated a succession crisis of some kind. Hon. Alex Sanders (B.S. '60), Ralph McCullough (B.A. '62), Ed Westbrook (B.E. '74), Hon. George Kosko (B.S. '66), and Hon. Robert Carr (B.S. '67) were almost certainly all over 55 when the school's first class graduated. With the (hopefully) perpetual life of a law school, they needed to have a stronger plan in place for transitioning the school to new shareholders or some non-profit foundation or something.
- Problem 4: Judges of all people are taking on sizable personal debt to be repaid through the school's profits, which will be derived from student tuition revenue, much of which comes from federal student loan dollars. In theory, literally anyone could have borrowed a ton of cash, started a law school, siphoned off profits to repay the loan, and then enjoy the income stream from the equity. But let's not kid ourselves.
- Problem 5: The ABA seems to accredit anyone with a big league law library and a "commitment to diversity."
- Problem 6: Not really a problem problem, but who the shit are we kidding? Also, 75% of those guys never went to law school, and the one of did went to Columbia. 75% were also wealthy.
- Problem 7: Because it's for-profit, apparently there is little transparency and oversight to this sort of thing. Doesn't is seem like the ABA is asleep at the wheel on the HMS Justice? It seems the ABA could require financial transparency as a condition of accreditation, or that they could simply make stringent financial review an annual rite for operating law schools.
- Problem 9: Again, a lack of transparency. What were these deals? What colleges? Were the founders turning down deals that were good for the business but not good for their personal piggy banks?
- Problem 10: Possible misrepresentations to prospective students. During this entire time period, CSOL continued enrolling students and accepting tuition payments on 3/4-year degrees without any public disclosures that they were looking to sell the school to outside parties. If serious talks began in summer 2012, is it not fraud by omission to take tuition payments when you know those students are going to have a problem with InfiLaw ownership of the school, or that it will be a radically different school than advertised? (from the link: At one point during the Q&A, an audience member stood to ask a question of his fellow students: "If you had known the school was going to be sold to InfiLaw, how many of you would have applied?" In a crowd of hundreds, nearly none of the students raised their hands.)
- Problem 11: I'm not going to argue that signing with InfiLaw is per se bad, but to not control discourse and address students' biggest concerns up front is a huge problem. Any sale to InfiLaw should have been conditioned on limiting enrollment and other mechanisms to ensure the student body they weren't instantly being demoted to Arizona Summit status, but that's exactly what happened.
May 19, 2014: The South Carolina Committee on Academic Affairs and Licensing votes to reject InfiLaw's license. Their pretense for vetoing what is supposed to be a rubber stamp is that InfiLaw has two big lawsuits pending against it. The Attorney General actually issued a press release that more or less says they went outside the criteria.
- Problem 12: At this point, we're fudging on paint-by-numbers legal procedure to right the fact that CSOL's founders and the purchasing corporation have the shamelessness to run a law school as they do to maximize their own pocketbooks. In short, the rule of law is undermined as a correction to the bad faith actors undermining the spirit of the law. It's not the good faith actor who undermines the rule of law; it's the bad faith actor who thinking the existence of a strict interpretation loophole is the justification for exploiting one.
September 2014: Westbrook - the guy who actually paid the initial start-up fees - forms a non-profit group to build a viable alternative to InfiLaw. At this point in time, Kosko and Carr are still supporting the sale to InfiLaw and their defense is that CSOL has a "valid and binding contract" to sell to InfiLaw.
- Problem 13: The school's sale is almost certainly conditioned on its state license being active, so claiming there's a "valid and binding contract" after InfiLaw has withdrawn its application seems dubious on some level. Absent some major stupidity, there's no way InfiLaw wouldn't rescind (and win a rescission case) in this circumstance. At this point, the guy who actually put money into the school is working to set up a non-profit, while the two guys who didn't put a dime of earnest money in according to published reports are holding onto the InfiLaw sale despite virtually everyone who is not InfiLaw or the two of them being opposed to it. Also, their failure at this point to seriously consider getting out of the InfiLaw deal and trying to work on a viable alternative seems like a breach of their various fiduciary duties.
November 21, 2014: Maryann Jones resigns. She cites Ed Westbrook snapping at her as a primary reason. Also, students visibly protest budget cuts and furlough threats, demanding to see the budget. They are apparently denied.
- Problem 14: This raises a point about non-owner leadership. You hired someone who could clearly see what she was getting into, who walked away a week later? It makes me question all of their hiring decisions, not the least of which would be who was advising these people that signing a deal with InfiLaw as they did and trying to then start strong-arming students out of the blue to accept the deal was a good idea.
March 17, 2015: Buyouts are offered to faculty and staff. Westbrook cites both the $25 million in profit withdraws and an undisclosed amount in consulting management fees to Infilaw as cause of the school's woes. (Note that C. Peter Goplerud of InfiLaw seems to disagree with the latter).
March 26, 2015: In a scathing blog post, former dean Richard Gershon states that faculty members have told him Carr and Kosko have said they would rather close the school than give in to Westbrook's plan. Gershon claims they their original plan was to transition the school to nonprofit status.
March 27, 2015: Ed Westbrook resigns and withdraws from affiliation from CSOL.
April 27, 2015: InfiLaw states that has no plans to refile its application for a license.
May 6, 2015: CSOL announces it may suspend enrollment.
Has there ever been a more blatant example of law-bubble-in-motion than how this school was operated? Real people are currently paying 6+% interest on money that admittedly went directly into the pockets of elderly prestigious men. It did not go to the school's operating costs or into the school's long-term investments for future use. Three fucking years after the first class graduated, they started pulling big money out. And $25 million over a 3 or 4-year period is significant money for a law school with 150-200 graduates (my back of the envelope estimated operating costs annually would be around $15-20 million or so by other law schools' standards; their actual costs were likely lower).
I don't care what their intent was. They started a ridiculous school that had no business existing, siphoned easy money out, and severely damaged the financial future of the enterprise. By the former dean's account, two owners accelerated their own personal debt payments while saddling their students with increasingly-higher tuition that did not go to the benefit of the school.
I have more respect for weed dealers.
Frankly, that's where the take home lesson of Charleston Law should be. It'd be easy to review the situation and conclude that CSOL's problems stem from its for-profit status. If we were to do so - as many political elites have - the solution would be easy.
But it's not that simple. These men were judges and prestigious attorneys. They are the same class of men who run law schools nationwide, serving as their administrators, taking board positions, and patting each other on the back or ass, as the situation may call.
What happened at CSOL can happen anywhere, and it does. Maybe not $25 million in seeped "profits," but escalating salaries, frivolous expenses, benefits, junkets to God-knows-where places, absurd programs of God-knows-what Law, you name it.
For as much as CSOL charged, it was far from an abnormal price for a private law school. Was CSOL simply more efficient that it was able to suck that much profit out in such a short time? Should other schools get a pass simply because they find other places to put the money?
If the CSOL profiteers truly believed in social justice and having a law school in Charleston, they would deposit $25 million dollars in a fund to be paid to students who attended CSOL, or, at worst, donate it to a foundation to keep the school running. But at the same time, true justice would also require budget transparency for all law schools. Paying 7% interest on money that went straight to The Honorable Somethingorother or his beneficiaries is no better than paying 7% interest on John O'Brien's ridiculous salary or to sweeten already-sweet savings accounts or buying new high-tech gadgets for the entire faculty every year. And no, this sort of transparency doesn't always come out in Form 990 disclosures.
Because at some point long before it came out that CSOL's founders behaved like Cookie Monster in a gingerbread house, this shit crossed the thin line from isolated incident to industry trend.
Someone at the ABA should be looking at this shit way more closely than they apparently do at library offerings or diversity quotas.
As CSOL swirls, remember that real working attorneys paid for and/or are paying for this shit. Real fucking people, in the ABA's target demographic.